Zambia National Commercial Bank v Moses Banda (Appeal No. 174/2018) [2019] ZMCA 335 (28 August 2019)

• IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) Appeal No. 174/2018 ZAMBIA NATIONAL COMMERCIAL BANK .... (._ AND MOSES BANDA 2 N~~~~ANT RESPONDENT Coram: Kondolo, Makungu and Chishimba, JJJA On the 23rd day of Ja.nuary, 2019 and 28th day of August, 2019 For the Appellants: Mr. J. M. Mabbolobbolo of Messrs Makala and Company For the Respondent: Mr. M. Masengu of Messrs Masengu and Company JUDGMENT MAKUNGU, JA, delivered the Judgment of the Court. Cases referred to: 1. Mike Musonda Kabwe v. B. P. (Zambia) Limited (1995/ 1997 ZR 218. 2. Marriot v. Oxford and District Co-operatives Society Limited (1970) 1QB136. 3. Peter Ng'andwe and Others v. Zamox Limited and Zambia Privatization Agency (1999) ZR 90. 4. Printing and Numerical Register Company v. Sampson(1875) LR 19 EX.462 5. Kalusha Bwalya v. Chardore Prosperities and Another, Appeal No. 222/ 2013 6. Buchman v. The Attorney General ( 1993 - 1994) ZR 131. Legislation referred to: 1. Court of Appeal Rules, 2016, Statutory Instrument No. 65 of 2016. Other autho.riti.es referred to 1. Cheshire and Fifoot, Law of Contract, 13th Edition, Buttenvorth (1996) at page 29. , 1.0 INTRODUCTION l . 1 This is an appeal against the Judgment of Mrs. Justice M. K. Makubalo of 16th March, 2018 in favour of the respondent herein who was the plaintiff then. The respondent was granted security guard allowance being fifteen percent of his basic salary to be included in his terminal benefits. Assessment of the same by the Deputy Registrar was ordered. He was also granted costs. The rest of his claims failed. 2 .0 BACKGROUND 2. 1 The respondent was employed by the defendant in 1980 as a Bank Clerk. He rose through the ranks to Bank Manager in grade MS7 on 11 th April, 1997. As a Branch Manager at Kitwe Industrial Branch, he had a 24 hours physical guard service at his house pursuant to Clause 8 . 1 of his conditions of service which provided as follows : ''The bank s h all pay .1,5 % of .monthly basic salary to e mp loyees i n g rades MS1 'to MS7 as Security Guard A llowance s ave for a ll Heads of Business Centres ,a nd Branc hes w ho sh,a ll .be provided with twenty -J 2- four (24) hours security services in lieu of Security Guard Allowances. " 2.2 By a circular dated August, 1999 from the Director of Human Resource to all non-represented staff, the conditions of service were reviewed with effect from 1s t August, 1999 in line with clause 1.2 of the conditions of service. That memo was to the effect that subject to the monthly basic salaries for non represented staff which were effected on 1st February, 1999 and the recent restructuring of the pay slip which had seen the rationalization of allowances, it had become necessary to review the conditions of service as follows : The basic monthly salary was adjusted by loading 36% of the current allowances. Housing allowance and car loan allowance remained the same . Personal loan, h ou se loan and group life assurance were adjusted upwards. The severance scheme was stipulated as 1 to 10 years - 1.5 X monthly salary for each completed year of service . Over 20 years - 2.5X monthly basic salary for each completed year of service. Other conditions of service remained the same. -J3- 2.3 On 5 th May, 2000 the respondent was transferred to the Head office Compliance and Controls Directorate on lateral basis with immediate effect. 2.4 On 27 th May, 20n3 the respondent was appointed as Manager Operations, Lusaka Business Centre with immediate effect. 2.5 At this point, the appellant stopped providing him with either physical guard service or guard allowance in cash. On 19th December, 2000 the respondent complained about non payment of guard allowance to the appellant in writing and stating that he had not been paid that allowance since he moved to head office and requested for payment. 2.6 On 5 th February, 2001 the respondent wrote a reminder to management regarding his request for payment of allowance. On 13th February, 2001 the appellant replied and advised him that guard .allowance was discontinued in August, 1999 and as such his claim was declined. 2. 7 In the same year 2001, the respondent ended up reporting the matter to the Commission of [nvestigations who investigated •-J4- the matter until 13th February, 2007 when they wrote to him that their investigations revealed that he did not exhaust the laid down procedures before presenting his complaint to the Commission. He was therefore advised to exhaust the internal grievance procedures before reverting to the Commission. The Commission wrote a letter to him on the same lines on 5 th September, 2007. 2.8 On 20th September, 2007 the respondent applied for separation from employment on the basis of the bank's Voluntary Severance Scheme for Non-Represented Staff. 2.9 His application was only accepted on 17th August, 2009. His severance package was calculated without accounting for the guard allowance. 2.10 On 8 th July, 2015 the respondent commenced an action against the appellant claiming breach of contract, payment of security guard allowance of 15% of the basic salary and loss of final salary at MSS level to calculate terminal benefits. He also claimed interest and costs. -JS- 3.0 EVIDENCE BEFORE THE LOWER COURT 3.1 The plaintiff gave the undisputed evidence as stated in the background above. His further evidence was that he considered his transfer to Head Office, Lusaka as Manager in the same grade MS7 to be irregular beca use managers at Head Office were in grade MSS which was higher than MS7. He considered being at MS7 as a demotion because his colleague a manager at the same office was in MS6 like all other managers in his position. He was later positioned as Senior Officer which is grade 8 and three grades below a manager. The plaintiff refuted that security guard allowance was merged with his basic salary because it was not one of the allowances affected as indicated in the circular of August, 1997 on adjustment of salary structures. 3. 2 He claimed that he was under paid because guard allowance was not taken into account when computing his severance package. 3.3 The respondent alleged that not all allowances were merged into the salary in August, 1999. However, he produced no documentary proof that the security guard allowance was not -J6- merged with his basic salary. When he was transferred from Livingstone Branch to Kitwe Industrial Branch, the salary was increased even though it was called a lateral transfer. He stated that the manager at Kitwe Industrial Branch is lower in rank than the manager at Head office. He claimed that his colleague in the same grade MS7 at Head Office used to receive fuel allowance where as he was being paid only K4.00 as transport allowance. The respondent accepted the conditions of separation. 3.4 The defendant's sole witness Mobbray Mwewa's evidence was that during the course of his employment, the respondent raised a complaint with the manager over his transfers which he construed as promotions and not lateral transfers but management maintained that the transfers were on a lateral basis. The respondent reported the matter to the Commission of Investigations who summoned both parties. However, before the Commission concluded the respondent opted to go on early retirement. The respondent was fully paid his retirement package in accordance with his grade MS7. -J7- 3.5 It was disputed that the plaintiff should have been paid as though he fell under grade MS5. 3.6 As £or the merging of allowances with the salaries, the security guard allowance like medical and education allowances stood separate but in August, 1999 they were merged into the basic salary. The only allowance which remained as a stand-alone was housing allowance. The respondent's witness further stated that banks were graded differently. Grade A branch was higher than B and C. When the plaintiff was transferred to grade A, he was not a branch manager. He was someone's subordinate and his grade remained the same. 3.7 His further evidence was that the plaintiff having been on a written contract, any variation of his contract should have been made in writing to him. The plaintiff was not individually written to about the variation concerning security guard allowance .. That the plaintiff was provided with physical guards and not cash as the company used to pay the providers of the .guard services. The respondent's claim for guard allowance was rejected. -J S- 4 .0 DECISION OF THE COURT BELOW 4.1 The lower court made findings of the undisputed facts concerning the record of the respondent's employment as stated in the introductory part of this judgment and there is no need for us to repeat it. 4.2 The learned trial Judge further found that if guard allowance was discontinued in August, 1999, then the appellant did not explain why the respondent continued receiving it up to 2000 when he was transferred to Lusaka. It meant that the respondent had not consented to the allowance being discontinued having been transferred on a lateral basis. 4.3 The court agreed with the plaintiff that in the circular of August, 1999 there was no express mention of guard allowance being merged with the basic salary. The letters of transfer that were written to the plaintiff indicated that he moved with his terms and conditions of service, therefore any alteration of the same ought to have been disclosed to him to enable his consent to the change or not. The court relied on cases which address the issue of consent by an employee to variation of terms and conditions of service: Mike Musonda -J9- Kabwe v. B. P. (Zambia) Limited,111 Marriot v. Oxford and District Co-operatives Society Limited 121 and Peter Ng'andwe and Others v. Zamox Limited and Zambia Privatizati.on Agency.131 4. 4 The Judge found that it was not disputed that the respondent's guard allowance was discontinued. She found that the respondent is entitled to guard allowance to be included in the computation of his terminal benefits. 4.5 As regards the issue whether the respondent was demoted, the court considered the document entitled Salary Structure for Non-Represented Staff which 1s on pages 148 - 149 of the record. The court observed that salary grades are given according to the category of officers found at various branches of the appellant. The court noted that position 7 graded MS7 were senior Officers at Head Office, Manager Operations and Manager Customer Service at Business Centre and Managers at 'Cl' branches i.e. Mongu, Kapiri and Kitwe Industrial. They were all in grade MS7. She stated that this explains why the plaintiff was being transferred on lateral basis. The plaintiff -JlO- failed to prove that the Manager, Customer Services was receiving a higher- salary than him. 4.6 She further found that the respondent was not victimized but that he was frustrated by the movements from one branch to another on the same level, whilst his colleagues were promoted to MSS without giving him reasons why he was not being promoted. 4.7 Further findings were that the respondent on his own accord opted to go on early retirement upon being sidelined for promotions and upon not receiving a satisfactory response about his guard aUowance. The plaintiffs case succeeded on guard aUowance only which was referred to assessment. 5.0 THE APPEAL The appellant has advanced the following grounds of appeal: 1'. The court below erred in law and in fact when it held that it was not disputed that the respondent's guard allowance was discontinued. -Jll- 2. The court belo.w erred in law and fact when it held that the respondent was entitled to guard allowance to be included in the computation of his ter.minal benefits. 6.0 ARGUMENTS BY THE . APPELL. ANT'S ADVOCATE 6. 1 According to the appellant's heads of argument filed herein, which were relied upon entirely during the hearing of the appeal, the court's finding that it was not in dispute that the respondent's guard allowance was discontinued was not supported by evidence. 6.2 The appellant's evidence was that guard allowance had been discontinued before the respondent went on early retirement. On the other hand, the respondent admitted 1n cross - examination that the conditions of service were changed in 1999. 6.3 Although the respondent testified that guard allowance was not merged into salary, he conceded in cross - examination that he had no proof that guard allowance was not merged into the salary. The appellant's evidence was to the effect that guard allowance just like medical and education allowances -J l 2 - were stand-alone allowances at one time but in August, 1999 they were merged into salary. This evidence remained unchallenged during trial. Counsel further stated that even when the respondent applied for guard allowance after being transferred from Kitwe to Lusaka, the appellant advised him that guard allowance had been discontinued in 1999. 6.4 Arguments in support of the second ground of appeal are that the holding that the respondent was entitled to guard allowance to be included in the computation of his terminal benefits was not supported by evidence. Since guard allowance had been merged into salary in August, 1999, it is inconceivable that the respondent could have an allowance which was non-existent included in the computation of his terminal benefits. 6.5 Counsel pointed out that the respondent separated from employment on the basis of the Voluntary Severance Scheme on 7 th August, 2009, a period of 10 years after rationalization of all allowances through the 1999 circular. -J13- 6.6 According to the respondent, in acknowledging and accepting the terms of separation, undertook not to have any further claims against the appellant whatsoever. The relevant portion of the undertaking on page 14 7 of the record is couched as follows: "I Moses Banda acknowledge receipt of the letter and accept the terminal benefits ansing from the stated formula as final payment and I shall have no further claims against the bank whatsoever under the circumstances." 6. 7 Mr. Mabbolobbolo therefore submitted that by s1gn1ng the letter, the respondent contracted with the appellant by undertaking, to have no further claims against the appellant under any circumstances. We were referred to the Cheshire, Fifoot and Furmston on the Law of Contract, 13th edition, Butterworth (1996) at page 29: "Behind all for.ms ,qf contract, no doubt lies the basic ideal ,of assent . . A c ,o,ntl"iacting party unlike a tort feasor is .bound because he has agreed to be bound. Agre,em,e;nt., howeve.r, ·is not a mental state but an -,J14- act, an,d as an act, is a matter of inference from ,condu,ct. The p .arties are to .be judged not by what is in their minds but :what th,ey have said or written or done.'' 6.8 The case of Pri.nt ing and Numerical Register Company v . Sampson '.(4! which was quoted with approval in the case of Kalu.shaBwalya v . Chardo.re P.rosp,e:rities and Another,151 was also rdied upon where Jessel MR stated as follows : "'f the.re is one thi~g more than another whi.ch public policy requires, it is that men of full age and competent undertaking shall have the utmost liberty ,of contra,cting ,and their contracts when entered into freely and voluntarily shall be enforced by the court ., ,. OJ ,JUS tc,e. t · .,, 6.9 In light of the said authorities, it was argued that the respondent should not be allowed to resile from his voluntary undertaking. 6.10 Counsel finally submitted that this is a proper case for the court to reverse the unsupported findings of the court below and uphold the appeal with c osts. -J15- 6.11 In the heads of argument filed herein on 2 nd August, 2019, learned counsel for the respondent submits as follows: The court below was on firm ground when it found and held that the guard allowance for the respondent was supposed to have merged with the salary from May, 2000 to September, 2009 when the respondent was transferred to Lusaka and retired respectively. The appellant after the revision failed to inform the respondent personally in writing as he had a written contract as opposed to an oral contract. This omission falls in the ambit of Mike Musonda Kabwe v. B. P. Limited.111 This breach attracted damages which the court did not award. 6.12 The court below erred both in law and in fact when it did not find in favour of the respondent that the appellant's Lusaka Head Office did not have a grade MS7 for a Manager but that of MS5 which the respondent deserved. If the respondent were granted MS5, he would qualify for fuel allowance. However, because he was not given MS5, a grade for a manager which he was, he was demoted. -J16- 6.13 Under the circumstances, counsel prayed for an award of guard allowance, damages for breach of contract and an award of MS5 with interest and costs. 7 .0 DECISION OF THIS COURT 7 .1 We have carefully considered the record of appeal and the submissions for and against the appeal. The two grounds of appeal will be handled as one because they are intertwined. 7.2 On the first ground of appeal, we refer to pages 22 and 23 of the judgment, where the learned trial Judge in analyzing the evidence, found that the circular of August, 1999 did not expressly state that guard allowance was merged into the basic salary. 7.3 The Judge noted that the appellant did not see that his basic salary had that allowance merged even though he did not produce a pay slip to support his evidence. Since he had moved on lateral basis, any alteration of his terms and conditions of service ought to have been disclosed to him personally 1n writing to enable him accept or refuse the alteration. -J1 7- 7.4 The learned judge opined that: "If guard allowance was discontinued in August, 1999, then the defendant did not explain why the plaintiff continued having it up to 2000 when he was transferred to Lusaka." 7.5 We are of the view that the failure by the appellant to explain why the respondent continued getting guard services at his house in lieu of the guard allowance for about a year after the circular of August, 1999 weakened the appellant's case. Furthermore, the appellant did not produce any documentary evidence that the respondent's salary included guard allowances from the time he was transferred to Lusaka up to the time he retired. 7 .6 The appellant"s assertion that the respondent left employment on Voluntary Severance Scheme ten years after the rationalization of all allowances through the August, 1999 circular, does not help the appeal because the respondent protested against the failure to pay the guard allowance in lieu of .guard services from 2000 and has since continued demanding for payment. -J1 8 - 7.7 The issue of the undertaking made by the respondent not to make any further claims against the appellant upon receiving the severance package, was not brought up in the court below. Therefore, it was improper to bring it up on appeal. We are fortified by the case of Buchman v . The Attorney General. 161 7.8 The respondent on the other hand has prayed for an award of damages for breach of contract and benefits under grade MSS with interest and costs. These claims are made inform of a cross appeal but no notice of cross appeal was filed within seven days after the record of appeal was served upon the respondent. This is contrary to Order 10 Rule 11 of the Court of Appea l Rules which reads: "If the respondent fails to give notice within the time prescribed the respondent shall not be allowed, except by leave of the court, to contend on the hearing of the appeal that the judgment appealed against should be varied." 7.9 We therefore, will not deal with the purported cross appeal. -J19- . S. O CONCLUSION 8.1 All in all, the appeal is bereft of merit and it is dismissed with costs to the respondent which may be taxed if not agreed upon between the parties. = M. M. KONDOLO, SC COURT O. F APPEAL JUDGE ::::- . ...••••..••••.•.............•........... F. M. CHISHIMBA COURT OF APPEAL JUDGE ....... ~ ...... . C. K. MAKUNGU COURT OF APPEAL JUDGE -J20-